Mortgage Rate Cuts: Major Lenders Slash Interest Rates
The mortgage market is heating up as mortgage rate cuts drive fierce competition among banks and building societies. Among the key players cutting rates are Barclays, TSB, and Santander, with some deals dropping below 4% for the first time this year. Financial experts predict that more lenders will follow suit in the coming weeks, making the mortgage market increasingly competitive for borrowers.
The Start of a Mortgage Rate Battle
Industry insiders suggest that Santander has “fired the starting gun” in what is expected to be a wave of mortgage rate reductions. Money market swap rates are declining. As a result, mortgage providers are adjusting their offerings to attract new customers. Analysts believe it is “only a matter of time” before sub-4% mortgage rates become more widely available.
Key Mortgage Rate Cuts by Major Lenders
Santander
Santander took a bold step by lowering mortgage rates. It introduced four new residential products with two- and five-year fixed deals at 3.99%. However, these attractive rates are limited to borrowers who can provide a 40% deposit, meaning the loans are set at a 60% loan-to-value (LTV) ratio.
The bank has not neglected those seeking to remortgage, offering a 3.99% deal with the same 60% LTV criteria. Beyond these flagship deals, Santander has reduced rates across more than 80 mortgage products, with cuts of up to 0.40 percentage points.
Barclays
Barclays has made substantial adjustments to its mortgage range. Additionally, it launched a five-year fixed-rate mortgage at 3.99% for borrowers with a 60% LTV. The lender has also applied reductions across its broader residential, buy-to-let, and remortgage product ranges, with some deals seeing reductions of up to 0.40%.
Coventry Building Society
Coventry Building Society supports first-time buyers by cutting rates on fixed purchase products. It also lowers rates for 90-95% LTV borrowers. Additionally, existing customers at these same LTV tiers will benefit from lower fixed-rate deals.
TSB
TSB has revamped its mortgage products by reintroducing five-year fixed-rate mortgages for first-time buyers and home movers at 90-95% LTV. The lender reduced two-year fixed-rate mortgages for first-time buyers and home movers up to 75% LTV. Additionally, 90-95% LTV rates dropped 0.1%.
For those remortgaging, TSB cut two-year fixed-rate deals up to 75% LTV by 0.15%. Meanwhile, five-year fixed rates fell by 0.1%. Following the recent Bank of England rate cut, TSB has also adjusted its variable mortgage rates, with its homeowner variable rate now set at 7.99%.
NatWest and Other Lenders
Earlier in the week, NatWest joined the movement by reducing its mortgage rates by up to 0.36%. Halifax, HSBC, and Clydesdale Bank previously reduced rates. Consequently, they sought to stay competitive in response to shifting market conditions. Yorkshire Building Society followed suit, lowering rates on the same day the Bank of England announced its base rate adjustment.
The Role of the Bank of England’s Base Rate Cut
Last week, the Bank of England lowered its base rate from 4.75% to 4.5%, a move that has directly influenced mortgage pricing. In anticipation of this decision, several lenders had already adjusted their rates downward, preparing for increased borrower demand. With interest rates playing a crucial role in mortgage affordability, lenders are striving to entice new customers by offering more competitive deals.
Market Outlook: More Rate Cuts to Come?
Financial experts believe that the downward trend in mortgage rates is set to continue. Rachel Springall, an analyst at Moneyfacts, noted that declining money market swap rates indicate more lenders will lower mortgage rates. Combined with the base rate cut, this suggests sub-4% mortgage products will soon reappear in the market.
“The millions of mortgage borrowers looking to refinance this year need some good news,” she stated. “It’s safe to say there are big expectations for more lenders to compete on price to entice new business in the coming weeks.”
What This Means for Borrowers
For potential homebuyers and those looking to remortgage, the current rate reductions could present an opportunity to secure a more affordable deal. However, while sub-4% rates are making a return, access to these deals remains limited to those with substantial deposits or equity in their homes.
Borrowers should keep a close eye on the market as more lenders adjust their rates in response to competition and economic changes. Seeking independent financial advice or using mortgage comparison tools may be beneficial in securing the best deal available.
Conclusion
The mortgage price war is in full swing, with leading lenders slashing rates in a bid to attract customers. Santander, Barclays, TSB, Coventry Building Society, and NatWest have made significant cuts. Meanwhile, other lenders are expected to follow soon. With the Bank of England’s base rate reduction and falling money market swap rates, mortgage borrowers may soon have even more competitive deals to choose from. Now may be the right time to secure a new mortgage or refinance. Borrowers should explore options and benefit from rate cuts.
